Personal Finance Vocab Terms

Disability Insurance

A policy that insures a worker in the event of an occupational mishap resulting in the disability: compensates the injured worker for lost pay or provides income replacement due to inability to work from illness or injury.

Disposable Income

The amount of money available for spending and saving after taxes and essential living expenses have been deducted.

Dividend

Distribution of a portion of a company's earnings, decided by the board of directors, to shareholders. Dividends can be issued in cash or additional shares, providing a return on investment for shareholders.

401K

A retirement savings plan sponsored by an employer that allows employees to save a portion of their paycheck before taxes are taken out. Employers may offer matching contributions to enhance savings.

Adjustable rate mortgage

A type of mortgage where the interest rate may change periodically based on changes in a corresponding financial index, which can affect monthly payments.

Annuity

A financial product that provides a series of payments made at equal intervals, often used as a means of securing a steady income during retirement.

Appreciation

the increase in the value of an asset over time.